Opinion Contributor

Under ACA, employer mandate could mean fewer jobs

This March marks the third anniversary of the passage of the president’s sweeping health care legislation. But for many in the business community now facing a litany of difficult decisions in the law’s wake, this milestone will be met with capitulation rather than celebration.

With the employer mandate, Obamacare puts the nation’s job creators between a rock and a hard place. Despite the gentle sounding title, the Shared Responsibility provision actually takes the two parties who should be making decisions about employer-sponsored health coverage (the employer and the employee) completely out of the equation. Beginning in 2014, large employers must provide a prescribed level of health care coverage to all full-time employees or potentially pay a hefty penalty. While this may sound relatively straightforward, it is anything but.

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Beyond imposing a costly and non-negotiable mandated benefit, the law also redefines the long-standing definition of a full-time employee. With the passage of the law, an employee working an average of 30 hours or more per week over a month is a full-time employee. Further, the law sets out a complicated algorithm to determine whether a business is a large employer. Aggregating the hours of all part-time workers and adding in the number of full-time workers are necessary to determine whether a business has the equivalent of 50 or more full-time employees and is therefore, a large employer.

Under the guise of improving access to coverage, the mandate presents a false choice for owners: provide one-size-fits-all health care coverage at the expense of higher wages and other benefits; or potentially pay a penalty. The unfortunate reality is that, with this devil’s choice, everyone ends up paying a penalty — employers, employees and the unemployed. Whatever “choice” the employer makes will lead to fewer jobs, lower wages and lost revenue.

For employers near the “large” employer threshold, we can expect to see layoffs or dramatically reduced hours. These will be tough decisions, especially for small businesses where employees are like family and benefits options are often discussed and agreed upon collaboratively. The rising cost of the mandated insurance plans will very likely force many businesses to drop coverage entirely and pay the steep penalty, a difficult choice but a necessary one in light of increasingly cost-prohibitive employee coverage. Smaller businesses that might otherwise be eyeing expansion and growth down the road will most likely reduce or cap the number of employees to avoid the expensive mandate in the future.